Birth To Billions: Zagat Survey

You're planning to descend upon New Orleans-an eating mecca
known for its extraordinary creole cuisine-and don't have the
foggiest idea where to eat. Any sophisticated traveler will tell
you the simple solution: Pick up a copy of the current Zagat New
Orleans Restaurant Survey for a list of the city's best
restaurants in all price categories. Within 10 minutes, you'll
have a rundown of the best restaurants in town-ranked by food,
decor, service, cost and more.

No seasoned traveler would think of boarding a plane without a
copy of the Zagat survey for their intended destination. In the
space of a decade, the famed restaurant guides, which rate more
than 15,000 restaurants in 50 cities across the United States and
Canada, have become an institution among discerning
restaurant-goers. The $10.95 pocket paperbacks are gobbled up as
soon as they roll off the press. Don Rieck, manager of Doubleday
Books' posh midtown Manhattan location, says the Zagat New
York Restaurant Survey is the bestselling book in the
store's history.

The brains behind the Zagat publishing empire are a most
unlikely pair. Husband-and-wife team Tim and Nina Zagat (56 and 54,
respectively) never expected to get into the restaurant-rating
business, much less one day see multimillion-dollar sales figures.
How did these two former corporate fast-trackers turn into rising
entrepreneurial stars?

Food, Glorious Food

Going into business was the furthest thing from Tim's and
Nina's minds back in Yale Law School. They met in 1963, married
and, after graduation, were hired by prestigious Wall Street law
firms. They spent two years in each firm's respective Paris
office before being transferred back to New York in 1970.

Besides their jobs and the accompanying high-powered lifestyle,
the Zagats had one powerful passion in common: They loved to eat.
We're not talking Twinkies or Chee-tos here; you'd never
catch the Zagats in a McDonald's or Burger King. No, their
passion is gourmet food, exceptional wines and elegant ambience.
They love preparing, consuming and talking about food; above all,
they enjoy discovering new cuisine in great restaurants. In Paris,
the Zagats whiled away entire evenings at the city's best
eateries. They returned to the United States lifelong gourmets.

The Zagats never tire of explaining how their passion for food
led them into entrepreneurship. A smile lights up Tim's face
when he remembers the eating and drinking orgy during which the
idea was born. "Back in New York practicing law, we helped
organize a group of friends who met for dinner once a month,"
he begins. "The dinners took place either in someone's
home or at a great restaurant. Wherever they were held, they were
blowout events." That means they pulled out all the stops and
forgot nasty words like calories and cholesterol. The eating
extravaganzas featured incredible food and upwards of 10 different
wines.

At one dinner, the conversation turned to one restaurant critic
and how unreliable his restaurant selections were. There had to be
a better way to rate restaurants, someone insisted. Tim put his two
cents in and proposed the group rate restaurants by creating a
questionnaire and surveying their friends.

Thus, the Zagat survey was born. The concept was simple, yet
brilliant: "A group of people are more likely to be accurate
about a restaurant than one person," Tim explains. With the
help of friends, he and Nina put together a one-page survey,
eliciting restaurant ratings and comments from friends, business
associates and acquaintances who judged food, decor, service and
cost. "Everyone who participated got a copy of the
results," says Nina.

The first survey, which polled 100 friends, colleagues and
clients, debuted in 1979. A photocopied list of 75 restaurants and
brief comments about each-crammed on a single legal-sized sheet of
paper-was mailed to everyone who had participated.

"We were just doing it for fun," Tim says. Little did
they know they were laying the foundation for a moneymaking
enterprise.

More Than They Could Chew?

Over the next few years, the Zagats turned out a new survey
annually, each one boasting more participants and more restaurants.
By 1982, they had a stable of approximately 600 voters rating 300
New York restaurants. The survey had a loyal cult following not
only among avid restaurant-goers but also in the boardrooms of
banks, brokerage houses and corporations. Busy executives eat out a
lot and are always looking for elegant eateries at which to wine
and dine clients.

While producing the survey was a labor of love for the Zagats,
it had become an expensive and time-consuming one. By the third
year, they had to hire a data-processing firm to tabulate the
results. And they were now giving away more than 5,000 copies a
year, which Nina calculated was costing them $1,000 a month-not
including the actual dining out.

Once they realized they were spending close to $12,000 a year on
their hobby, the Zagats decided to put a price tag on the survey
and publish it. "We figured even if we couldn't make money
on it, we could defray our costs and take a tax deduction,"
explains Tim.

What to publish? Using other guidebooks as models, the couple
designed the guide to be pocket-sized, easily stuffed into a jacket
or purse. The next important issue was how to publish. Should they
do it themselves or find an established publisher?

After talking to a number of publishers, the decision was easy:
None of the prestigious publishers wanted any part of them. Even
Tim's uncle, who owned a publishing company, nixed the idea.
"My uncle said his company had printed a guidebook by eminent
New York Times food critic Craig Claiborne and it never sold
more than 30,000 copies a year," Tim recalls. Publishers felt
a guidebook was a poor risk. It lacked national appeal, and there
was no guarantee even New Yorkers would buy it.

So the Zagats did it themselves. In 1983, their first year, they
sold 7,500 copies of the $8 books and broke even. "We owe that
to our surveyors, who bought six to eight books apiece," says
Tim. "The deal was, you got one free copy if you voted. We
were pleasantly surprised to find they were willing to pay full
price [for extra copies], demonstrating an incredible loyalty to
the project." The following year, sales more than doubled to
18,000 copies, and in 1985, the Zagats outsold The New York
Times' dining guide, selling more than 40,000 books.

How did they do it? Hard work. Over and over, the Zagats loaded
their station wagon with books, visiting virtually every bookstore
in New York City to persuade owners and managers to test the book
on their shelves. "It was quite an experience," Nina
recalls. "The book trade is a Catch-22 business."

Explains Tim, "Bookstores tend to stock only books that are
well-established and selling well."

But booksellers and publishers alike had to eat their words when
the Zagat guide became a hot number. In 1985, New York
Magazine did a splashy cover story on the Zagats. Soon after,
The New York Times and People magazine featured
stories on the couple as well. And suddenly, New York-and the rest
of the country-discovered the unpretentious little guidebook.

In 1986, Zagat sales took off like a rocket, soaring to more
than 100,000 copies. The Zagats were as surprised as anyone else:
"We had only expected to sell 35,000 copies that year,"
says Nina.

"It was quite an experience," agrees Tim, still awed
by the way the business took off. "It wasn't like we
planned every step." Indeed, he jokes, if they had sat down to
plan the business, "we probably would have become frustrated
and quit."

But since the guidebook was fun, pouring all their energy into
it was easy. By 1986, the Zagats had discovered what
entrepreneurship is all about. "Yes, you have to have a great
product and make smart decisions," Tim says, "but more
important is doing something you love. That's the only thing
that kept us going. That's why we worked so hard at improving
the books. When you're not quite sure where it will all wind
up, what keeps you going is the pleasure of doing something you
enjoy. And the real kicker is when you turn profitable and look at
the bottom line, and it's all yours."

All They Can Eat

The Zagats realized they were at the helm of something big. At
the end of 1986, Tim quit his job and made a full-time commitment
to the guidebook; Nina continued her law practice until 1990.

For the Zagats, 1986 was a strategic year. Tim hired their first
full-time staffer (today, they have 30 full-time employees and more
than 60 part-time guide editors in cities throughout the United
States). The couple then built on their success by publishing
guides for four new cities-Washington, DC; Los Angeles; San
Francisco; and Chicago.

"We knew then we had the tiger by the tail," says Tim
with a smile. "With robust sales, we didn't need outside
financing to foot the cost of expansion. We could finance it
ourselves from cash flow."

From then on, the Zagats began adding new cities each year.
Their goal is to cover the entire United States with editions for
every major city. At the moment, they're working on Las Vegas
and considering cities in the Carolinas and Virginia.

By doing everything themselves in the beginning, the Zagats
became masters at cost-cutting. They don't need an enormous
staff; instead, they hire just two people in every location they
cover-a prominent food writer and a public relations person or food
expert. The writer handles the editorial side; the PR person
recruits surveyors by tapping wine shops, gourmet food stores, and
law, accounting and investment banking firms.

Getting surveyors, known as "Zagateers," to
painstakingly fill out Zagat questionnaires was surprisingly easy.
In virtually every new city, volunteers couldn't wait to share
their opinions of local restaurants. Currently, the Zagats boast a
volunteer army of 75,000.

The Zagats also expanded into other types of guidebooks, all
based on the same survey concept. In 1988, they released guides
covering hotels, resorts and spas nationwide; in 1990, they began
surveying airlines and car rental companies; in 1992, they
published a pair of national guides, America's 1,000 Top
Restaurants and America's Best Value Restaurants.
More are in the works: "We're working on filling in the
gaps in the United States," says Nina.

Though they expanded their restaurant reviews to cover Canada in
1990 and are working on a London edition, the Zagats aren't yet
ready to cover the rest of the world. Aside from logistical
problems, Tim points out bookkeeping and cultural difficulties.
"In Japan, for example, it is considered impolite to say
negative things," he explains. "Americans don't think
twice about dumping on restaurants they don't like. The
Japanese just wouldn't do that."

No matter: For now, the Zagats have plenty to do. They've
created an empire that grows bigger every year. They've also
become a well-oiled team, with Tim overseeing sales, marketing and
editing while Nina handles operational nuts and bolts.

With so many projects going on at once, Nina says, they've
created their own checks-and-balances system to prevent errors and
stay on track. After 30 years of marriage, they know how to
capitalize on each other's strengths. "My tendency is to
try to do too much," admits Tim. "Nina saves me from
myself. I have a tendency to jump around; she keeps me focused. We
respect each other's opinions."

Like all couples in business, the Zagats have their differences.
Yet, perhaps due to their legal training, they've mastered the
fine art of compromise and have always managed to find a happy
middle ground. In the final analysis, it's as simple as this:
They sincerely enjoy working together.

What about tapering off to enjoy the fruits of their hard work?
That's not in the cards. The Zagats are having too much fun.
Aside from the thrill of building a thriving business, there are
other perks to savor. After all, how many of us can walk into
America's finest restaurants and be wined and dined like
dignitaries?

Nina and Tim Zagat

Birth Dates:Nina:August 12, 1942; Tim: May
13, 1940

Residence:New York City

Family:Two children: Ted, 20; John, 18

Business Philosophy:"Stay focused on your core
business and love what you do, since it consumes most of your
waking hours."

Bob Weinstein is the author of eight books and a frequent
contributor to national magazines.